Intel: Competitors Have Given Up ‘Scaling’ Advantage in Moore’s Law

By Tiernan Ray

Shares of Intel (INTC) are up 39 cents, or 1.7%, at $24.95., as CEO Brian Krzanich this morning kicks off his first-ever appearance before analysts since taking the helm from Paul Otellini back in May.

Krzanich said the company plans to expand its business as a foundry, making chips for other chip designers. So far, foundry manufacturing has had few customers, most prominently, programmable chip maker Altera (ALTR).

“You will see us focusing on a broader set of customers,” said Krzanich. “If somebody can use our silicon, and make computing better, than we want it to run better on Intel. It’s inclusive, it’s all-inclusive.”

Krzanich also talked up what he referred to as the “next-generation Atom,” the company’s chip for mobile devices, code-named “Broxton.”

He said the new mobile part would have a new “chassis,” or core, where it can swap out capabilities rapidly as Intel spins each new version. It is “targeted toward the high end” of mobile devices, he said, and will appear in mid-2015.

Another part, “SoFIA,” will be for “entry-level” smartphones and tablets, and will appear in the second-half of 2014.

Both chips are part of the company’s attempt to make Atom “on par with Core,” the company’s desktop chip family. Atom chips have tended to lag Core parts in terms of going into the latest semiconductor manufacturing technology. Krzanich had previously said the company would close the gap between the two chip lines as to when they enter the latest technology “node.”

“Now you have an entry-level part, fully integrated, 3G, LTE, on 14-nanometer,” he said. The part was previously based on ARM Holdings (ARMH) technology, but Intel will replace its rival’s instruction set with a CPU based on its own x86 instructions, said Krzanich.

“Atom is now an equal partner with Core. We still expect 2x performance [from Core], but we’re not going to slow down Core to get there.”

Overall, Krzanich said Intel will “not take our foot off the pedal” of process technology. He expects the company to be making parts as small as 10 nanometers in transistor size by 2015, versus today’s 22-nanometer parts.

Krzanich also said the company will make a big push to bring “perceptual computing” to devices in 2014, with things such as gesture and speech recognition. “It’s a 3-D experience,” he said. “You can see it, you can talk to it, you can touch it.”

Krzanich handed the baton to Bill Holt, Intel’s head of semiconductor manufacturing.

Holt told the analysts the company had had some initial hiccups in reaching full “yield” of 14-nanometer chips, but had made progress ameliorating that situation, and asserted all other aspects of 14-nanometer are going “very well.”

Holt threw up a slide showing that at 10 nanometers, the company will continue to drive down the cost per transistor.

Holt said that competitors were failing achieve cost-per-transistor improvements. That is because they are failing to pursue one of the long-standing tenets of Moore’s Law, the rule that roughly predicts the future of transistor integration.

Competitors, said Holt, have given up on “scaling” their chips to increase the “density” of circuits packed into a given area of a semiconductor. Intel, he said, would actually take the lead in scaling, and density, moving into 14-nanometer parts, where in past it had lagged.

“We were not leading in scaling before, that’s not news to anyone,” said Holt, referring to chips produced at 32 nanometers and prior.

“Those products were optimized primarily for performance,” and so Intel had avoided the problem that can crop up when transistors are packed more densely, namely that performance of the wires connecting transistors, the “interconnects,” can degrade.

“We didn’t scale the wires as much as we could have, because the products we were building didn’t demand that.”

Now, he said, the company’s technology would be focused more on those interconnects as Intel takes the scaling lead. The result would be the ability to more nimbly move between transistors optimized for performance, on the one hand, as in server and desktop chips, and transistors optimized for low-power mobile devices.

The results, insisted Holt, would be a broader breadth of technology “options.”

The costs of making chips at the latest process node, said Holt, rise more sharply these days because they require extra “mask” steps in the manufacturing process. He threw up a slide showing the curve upward in silicon costs. As Holt pointed out, Intel believes by increasing density of chips, it is offsetting those rising wafer fabrication costs.

Holt pointed out that while the entire industry is following the same technology trends, such as 3-D transistors, which Intel refers to as “Tri-Gate,” and which the industry knows more broadly as “FinFet.”

“Everyone is talking about using FinFets. They won’t ship till customers until 2015,” where as Intel has been shipping for a year now.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.